Apple Services Growth Expected to Accelerate in September Quarter

By Senad Karaahmetovic

Analysts at Morgan Stanley have recently assessed Apple’s Services sector following new insights from Sensor Tower.

According to their analysis, Morgan Stanley predicts that net revenue from the App Store rose by 1% year-over-year in December, marking the first growth period in six months. Consequently, they estimate that App Store net revenue for the December quarter reached $6.3 billion, while the overall Services segment generated $20.8 billion.

This estimate surpasses Morgan Stanley’s previous projection of $20.5 billion but falls short of the consensus estimate of $20.9 billion.

The analysts express optimism about the potential for Services growth to accelerate, especially after a 5% year-over-year increase in the September quarter. They see this as a significant turnaround after five consecutive quarters of declining growth in the Services sector. Looking ahead, they anticipate that App Store net revenue growth will pick up in each quarter of fiscal year 2023 due to eased year-over-year comparisons and a normalization of spending trends. Additionally, Apple is expected to benefit from price increases enacted in October 2022 across several international markets.

As a result, Morgan Stanley analysts feel "encouraged" that the growth trajectory of the App Store is improving after hitting a low in September.

As of 10:50 AM EST, Apple’s stock price had dipped by 3.3% for the day.